Article by Justin Bentley, Chief Executive Officer of the International Professional Security Association (IPSA)
There is a lot of guidance for retail security, which normally focusses on two distinct types of crime, customers stealing from the premises, i.e. shoplifting, or staff thefts of items out of the back door. Either way the retailer is without an item that was intended for sale. You can also add to this methods such as under-charging for friends at till points, or purposely damaging items so that they can be sold at a reduced price, in these cases there is a transaction however either with significantly reduced profit or more likely with the item sold below initial cost price. As with any of these methods, the business loses out directly, significant effort is put into place to reduce these losses. Technology has certainly helped with the most common method being the use of bar codes, enabling stock takes to not just identify shrinkage of stock, but also the specific items.
A recent attempted fraud however got my security mind thinking about the opportunities for your staff to steal from your customers. As in these cases all stock is paid for, it is initially invisible to the retailer, however in the long term it could cause severe reputational damage.
We start with the actual attempted fraud, a real occurrence, and a tale of caution. As this took place in America, some of the practices are less common in the UK, however still feasible. Three of us had gone to a restaurant for a meal, and at the end of the evening I asked the waitress for the check (in the UK, it is normally referred to as the bill, however the incident actually shows that the American term is more accurate). We received the usual itemised listing which included the three main courses, other items and drinks, which matched what we had ordered. Out came my credit card, and as is American practice still, the waitress took my card and the check to the till, processed the sale and returned with my card with the transaction slip neatly folded around. I am sure that most people, including myself normally, would have put the card and transaction slip in their wallet and left, however for whatever reason on this occasion I unfolded the slip and looked at it. I noticed immediately that the total shown was higher than earlier. As the transaction slip was also the receipt, it included the itemised listing of purchases and on inspection and additional expensive main course had been added. The manager was called, who managed to retrieve the original check which was identifiable by the hand written gratuity section and understood that the additional item had appeared at a point when it could not have been a simple error, and he noticed that the transaction had not actually been ‘finalised’ meaning that the waitress had left the sale as an open tab, giving herself the ability to go back to the transaction later and alter it further. The manager as well as rectifying my transaction, agreed that it needed further investigation, and I was later informed that they had uncovered a number of other similar occurrences and that the matter was being dealt with.
In this case, the assumption is that the intention was to later alter the transaction to convert the additionally charged amount to a generous tip, which the waitress would have then received. As the number of items sold would have matched the number of items leaving the kitchen, the “stock” would match and the establishment would be unaware of anything untoward having happened. The customer receiving their credit card bill weeks later might think that the amount was higher than remembered, but is unlikely to return and challenge the amount, especially considering this particular incident happened in a tourist destination.
Some readers may be thinking that this couldn’t happen in the UK, as current best practice in restaurants either involves the card transaction machine being brought to the table, or the customer having to go in person to the till, due to the requirement of entering a PIN to authorise the transaction. Commonly the employee will even state “check the amount, and then enter your PIN”. However it is mainly the principle in the detailed incident, where an employee would attempt to defraud a customer, without it being visible to the employer that concerned me.
Retailers need to consider how an employee with criminal intent could take advantage of customers. Before entering the security industry, I worked in retail management, and we were aware of the typical scenario of a genuine customer paying for an item with cash, the transaction not actually being processed through the till, and the cash being pocketed by the cashier. It was assumed that by good stock management that the discrepancies would be identified and that you would also be able to establish whether it was shoplifting by customers or theft by staff.
I am now starting to question about the opportunity for an employee to “mistakenly” charge a customer twice for an item, to then give them opportunity to profit from the transaction later, by either refunding the additional item to cash, pocket cash from a similar transaction or take the item home with them. Whichever method was used, a stocktake would not show an item as missing or unaccounted for. It is easy to write off duplicate charges as mistakes, and indeed there will be plenty of times when it is a genuine mistake, which does make it more difficult to identify the dishonest occasions.
Prevention is always the preferred option, so where possible retailers need to take the opportunity away. Using the requirement for management approval for refunds will ensure that the person at the till cannot refund items as cash for themselves. Requiring refunds to be conducted at a central point, e.g. a customer service desk, is often the favoured option of supermarkets in particular, which also means that the cashier is not necessarily aware as to whether a customer has noticed an additional transaction done on purpose, however is there any analysis done as to whether there are certain employees who create a disproportionate amount of errors (even if there is no dishonest behaviour behind it, there is certainly a training issue).
Retailers are already aware that there is always the possibility that an employee will steal from them. Sometimes the employee will even try and justify it by criticising wage rates, etc. however if an employee is dishonest, there is a risk that they would be willing to seek financial gain from any opportunity. The real risk to the employer is if a customer is targeted and becomes aware of the theft, that they are likely to hold the business culpable for the actions of their staff. The reputational damage could far outweigh the amount of the loss. Therefore it is worth retailers attempting to identify and eliminate where possible opportunities for employee theft, try and think of even the most devious methods that an employee could use. It has been said numerous times that you need to think like a thief, to catch a thief, so take a look and see what opportunities there are in your business, even if you are not the direct victim.